Concept explainers
Cash: Cash is the money which is readily available in the form of currency. Since cash can be easily converted into other types of assets, it is reported as current assets in the assets section as the most liquid asset.
Cash and cash equivalents: Cash is the money readily available in the form of currency. Cash equivalents are the near-cash items, which are readily convertible into cash. Cash equivalents have a maturity period of three months, or less than 3 months. Cash equivalents are reported along with cash in the assets section of the balance sheet, as ‘Cash and cash equivalents’.
Restricted cash: Restricted cash is the amount of cash kept aside for some restricted purposes, to ensure that adequate cash is available to meet specific purposes.
To indicate: The true and false statements
Want to see the full answer?
Check out a sample textbook solutionChapter 7 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
- To demonstrate the difference between cash account activity and accrual basis profits (net income), note the amount each transaction affects cash and the amount each transaction affects net income. A. issued stock for cash $20,000 B. purchased supplies inventory on account $1,800 C. paid employee salaries; assume it was current days expenses $950 D. paid note payment to bank (principal only) $1,200 E. collected balance on accounts receivable $4,750arrow_forwardOn August 31, 2024, Cullumber Company had a cash balance per its books of $26,480. The bank statement on that date showed a balance of $17,260. A comparison of the bank statement with the Cash account revealed the following. 1. 2. 3. 4. 5. 6. (a) The August 31 deposit of $17,150 was not included on the August bank statement. The bank statement shows that Cullumber received EFT deposits from customers on account totalling $2,230 in August. Cullumber has not recorded any of these amounts. Cheque # 673 for $1,470 was outstanding on July 31. It did not clear the bank account in August. All of the cheques written in August have cleared the bank by August 31, except for cheque #710 for $2,340, and #712 for $2,650. The bank statement showed on August 29 an NSF charge of $688 for a cheque issued by R. King, a customer, in payment of their account. This amount included an $9 service charge by Cullumber's bank. The company's policy is to pass on all NSF service charges to the customer. Bank…arrow_forwardThe following information pertains to Fish Cake Company on December 31, 2021: Bank statement balance- P5,000,000; Checkbook balance- P5,600,000; Deposit in transit- P2,000,000; Outstanding checks, including P100,000 certified check- P500,000. In Fish Cake’s December 31, 2021 statement of financial position, cash should be reported at:Required to answer. Single choice.arrow_forward
- Odum Corporation’s cash account showed a balance of $17,000 on March 31, 2019. The bank statement balance for the same date indicated a balance of $17,711.55. The following additional information is available concerning Odum’s cash balance on March 31: • Undeposited cash on hand on March 31 amounted to $724.50. • A customer’s NSF check for $175.80 was returned with the bank statement. • A note for $2,000 plus interest of $25 was collected for Odum by the bank during March. The bank notified Odum of this collection on the bank statement. • The bank service charge for March was $15. • A deposit of $960.75 mailed to the bank on March 31 did not appear on the bank statement. The following checks mailed to creditors had not been processed by the bank on March 31: Check # Amount 429 $57.40 432 147.50 433 210.80 434 191.90 A customer check for $149.50 in payment of his account and listed correctly for that amount on the bank statement had been incorrectly…arrow_forward3. Calculate the adjusted company book cash balance from the following information: On July 31st , after all transactions have been recorded, the balance in the company's Cash account has a balance of $27,202. A credit memo included with the bank statement indicates that the bank collected $770 on a note receivable. A debit memo included with the bank statement shows a $67 NSF check from a customer ,Noora. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded on the company's books.arrow_forwardThe following information was taken from a company's bank reconciliation at the end of the year. Bank balance Checks outstanding Note collected by the bank. Service fee Deposits outstanding NSF check Multiple Choice What is the correct cash balance that should be reported in the company's balance sheet at the end of the year? $10,620, $9,520. $5,673. $9,900 $8,700 $1,100 $ 27 $5,700. $4,500 $ 380arrow_forward
- A company shows an ending balance of $790. The bank statement shows a $14 service charge and an NSF check for $150. A $280 deposit is in transit, and outstanding checks total $310. What is their adjusted cash balance?arrow_forwardMiller Corporation’s December 31, 2019, bank statement showed a $2,054.25 balance. On this date, Miller’s Cash account reflected a $326.60 overdraft. In reconciling these amounts, the following information is discovered: 1. Cash on hand for undeposited sales receipts, December 31, $133.25. 2. Customer NSF check returned with bank statement, $424.20. 3. Cash sales of $627.25 for the week ended December 18 were recorded on the books. The cashier reports this amount missing, and it was not deposited in the bank. 4. Note receivable of $2,300.00 and interest of $23 collected by the bank and not recorded on the books. 5. Deposit in transit December 31, $340.00. 6. A customer check for $380.30 in payment of its account was recorded on the books at $830.30. 7. Outstanding checks, $2,032.55. Includes a duplicate check of $65.85 to C. Brown, who notified Miller that the original was lost. Miller stopped payment on the original check and has already adjusted the cash account…arrow_forwardWhich of the following statements is TRUE? a. Companies include postdated checks and petty cash funds as cash. b. Certificates of deposit are usually classified as cash on the statement of financial position. c. Savings accounts are usually classified as cash on the statement of financial position. d. Cash equivalents are investments with original maturities of six months or less.arrow_forward
- Miller Corporation’s December 31, 2019, bank statement showed a $2,041.25 balance. On this date, Miller’s Cash account reflected a $150.90 overdraft. In reconciling these amounts, the following information is discovered: 1. Cash on hand for undeposited sales receipts, December 31, $131.25. 2. Customer NSF check returned with bank statement, $426.20. 3. Cash sales of $625.25 for the week ended December 18 were recorded on the books. The cashier reports this amount missing, and it was not deposited in the bank. 4. Note receivable of $2,400.00 and interest of $24 collected by the bank and not recorded on the books. 5. Deposit in transit December 31, $330.00. 6. A customer check for $195.40 in payment of its account was recorded on the books at $945.10. 7. Outstanding checks, $2,030.55. Includes a duplicate check of $63.85 to C. Brown, who notified Miller that the original was lost. Miller stopped payment on the original check and has already adjusted the cash account…arrow_forwardIn connection with your examination, the Caliao Company presented to you the following information regarding its Cash in Bank account for the month of December 2020: A. Balances per bank statements: November 30, P215,600 and December, P230,400. B. Balances of cash in bank account in company's books: November 30, P165,450 and December 31, P226,800. C. Total receipts per book were P2,221,900 of which P12,100 was paid in cash to a creditor on December 24. D. Total charges in the bank statement during December were P2,189,700. E. Undeposited receipts were: November 30, P90 600 and December 31, P101,200. F. Outstanding checks were: November 30, P26,750 and December 31, P19,300, of which a check for P5,000 was certified by the bank on December 26. G. NSF checks returned, recorded as reduction of cash receipts were: Returned by bank on December and recorded also in December P10,400. Returned by bank on December but recorded also in January P8,600. H. Collections by bank not recorded by…arrow_forwardIn connection with your examination, the Caliao Company presented to you the following information regarding its Cash in Bank account for the month of December 2020: A. Balances per bank statements: November 30, P215,600 and December, P230,400. B. Balances of cash in bank account in company’s books: November 30, P165,450 and December 31, P226,800. C. Total receipts per book were P2,221,900 of which P12,100 was paid in cash to a creditor on December 24. D. Total charges in the bank statement during December were P2,189,700. E. Undeposited receipts were: November 30, P90 600 and December 31, P101,200. F. Outstanding checks were: November 30, P26,750 and December 31, P19,300, of which a check for P5,000 was certified by the bank on December 26. G. NSF checks returned, recorded as reduction of cash receipts were: Returned by bank on December and recorded also in December P10,400. Returned by bank on December but recorded also in January P8,600. H. Collections by bank not recorded by…arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub